Is Time Running Out For The Gulf Cooperation Council?

Over the past 37 years, the Gulf Cooperation Council (GCC) has proved to be a convenient arena for regional leaders to discuss political and economic issues and occasionally launch joint initiatives (some of which have even succeeded). But recent developments mean there are good reasons to doubt whether the body will make it into its fourth decade.

The organization was set up in 1981 by six countries – Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE – with grand ambitions to create a regional economic and political bloc. The hope was it would strengthen the members, who had been unnerved by the 1979 revolution in Iran and the start of the Iran-Iraq war the following year.

There have been some achievements over the intervening years, including the creation of a customs union which came into effect in January 2015 and a common electricity grid which was developed in two phases in 2009 and 2011. Such achievements are not negligible, but the GCC has still clearly failed to live up to its potential and the way diplomacy is being conducted in the region these days is placing the future of the organization under a dark cloud.

The greatest issue is the breakdown of relations between Qatar on the one hand and Bahrain, Saudi Arabia and the UAE on the other. The latter trio – which, together with Egypt, like to refer to themselves as the ‘anti-terror quartet’ – have embarked on an effort to isolate Qatar diplomatically and economically, claiming it provides support to terrorist groups around the region.

More than a year on since they launched their economic and diplomatic boycott of Qatar, it is difficult to point to any advances made by the Saudi and UAE-led group. The US and others have called on both sides to negotiate and find a new modus vivendi, but at the moment there appears little appetite for compromise on either side.

The schism means the six countries of the GCC now form three distinct groups. There is Qatar on its own; the trio of Bahrain, Saudi Arabia and the UAE; and the remaining two countries, Kuwait and Oman, which have been trying to fashion a middle way between their feuding neighbors.

While that has been going on, a series of new bilateral initiatives have been launched which threaten to further undermine the point of the GCC.

The rise of bilateralism

The most significant is the Saudi-UAE Joint Co-operation Committee (JCC), announced in December last year on the even of the GCC Summit in Kuwait (which broke up early amid rancor between the member states). It would, said the two governments, cover “all military, political, economic, trade and cultural fields, as well as others, in the interest of the two countries”.

The Saudi and Emirati governments had previously run a number of joint retreats of their officials and their forces are also both fighting on the same side in the Yemen war – although their proxies have also been fighting each other on occasion.

The first session of the JCC was held in Jeddah, Saudi Arabia on June 6 this year, jointly chaired by Saudi Crown Prince Mohammed Bin Salman and his Abu Dhabi counterpart Mohammed Bin Zayed. The two sides said they had identified 60 projects they want to tackle together over the coming five years.

More recently, Saudi Arabia also set up a bilateral co-ordination council with Kuwait, with the agreement signed on July 18 by Sheikh Sabah Al-Khalid Al-Sabah and Adel Al-Jubeir, the foreign ministers of Kuwait and Saudi Arabia respectively.

The plans for this council are more vague than for the Saudi-UAE one and it may prove to be little more than a name under which to hold the sort of bilateral talks the two countries already have. The governments already coordinate oil production activities in their shared Neutral Zone – production was suspended in 2014 but may resume next year according to recent media reports.

Taken together, the creation of these two forums suggests Riyadh is more interested in regional bilateralism these days than the multilateralism of the GCC.

That marks a significant departure from past policy. Plans for an even more ambitious GCC Union, based on something akin to the EU, were proposed by the then Saudi King Abdullah Bin Abdelaziz in 2011 which would have encompassed cooperation around foreign defense as well as economic policy.

The new Saudi position also marks an intriguing change from the sort of problems which have halted previous efforts at GCC integration. In the past, it was a fear of Saudi dominance which led the smaller countries in the bloc to either drag their feet on joint initiatives or simply pull out of them. Now it appears that Saudi disillusion with the GCC is driving events.

Past failures

For example, the idea of a common currency disappeared in 2006 when Oman said it would not take part. Three years later the UAE also pulled out of that project, after plans were announced to establish a Gulf central bank (that would look after the currency) in the Saudi capital Riyadh.

It is not the only reason for the failure of GCC projects to get off the ground though, with economic self-interest and a desire to maintain independence in a more general way also important factors.

That was seen when an agreement to introduce value-added tax (VAT) across the bloc in January was ignored by most countries. The UAE and Saudi Arabia were the only ones to stick to the deadline. For others, the risk of boosting inflation at a time when their economies were already under pressure may have been one motivation to delay introducing the tax; a desire to explore the potential for tax arbitrage may have been another.

A GCC rail project is another grand scheme which has gone nowhere. The aim was to build a high-speed passenger and freight line from Kuwait City in the north of the Gulf all the way to Oman’s Arabian Sea coast. However, it has been a victim of governments’ unwillingness to fund such an expensive infrastructure project given the uncertain benefits it would bring – trade between the Gulf countries has risen substantially over the past few decades but at $115bn in 2015 it still amounted to just 8% of the region’s $1.4 trillion GDP that year.

International encouragement

The GCC's allies have tried to encourage greater regional cooperation over the years, with few obvious signs of success.

The European Union has tried to negotiate a free trade agreement (FTA) with the GCC for years, but it has foundered on Gulf resistance to the idea of including provisions around human rights. Most talks with other partners over the past decade or more, including Australia, Japan and China, have also failed to reach a conclusion, although negotiations with Beijing have shown some momentum since resuming in 2016, after a seven-year hiatus.

Overall, the fruits of GCC trade negotiations remain rather slim. An FTA with Singapore came into force in September 2013 and another with the members of the European Free Trade Association (EFTA) – Iceland, Liechtenstein, Norway and Switzerland – followed in July 2014.

Military cooperation has also been found wanting. A military wing of the GCC, called the Peninsula Shield Force (PSF), was set up on 1984. However, it was not sufficiently developed to take part in the campaign to push Iraq out of Kuwait following the 1990 invasion. A contingent of PSF troops was sent into Bahrain in 2011 to quash pro-democracy demonstrations though.

Under President Barack Obama, the US said it wanted to encourage the GCC to act as a single unit when it came to defense, particularly in areas such as maritime security and missile defense. Washington made clear its preference for a multilateral Gulf security architecture during the US-GCC Strategic Cooperation Forum in Riyadh in 2012, but ultimately there has been little to show from such discussions. Subsequent talk of a unified military command has yet to be translated into action.

During his time in office, Donald Trump has contributed to the splits in the GCC, initially backing Saudi Arabia and the others in their dispute with Qatar, before eventually calling on all sides to resolve their differences.

The GCC as an organization could still survive the current period of regional upheaval, but even if it does it might well simply become an irrelevance. If that is the case, it will be that much more complex for the US and others to engage with the region in the future.

Dominic Dudley is a freelance journalist with almost two decades' experience in reporting on business, economic and political stories in the Middle East, Africa, Asia and Europe.